‘Discriminatory’ Turkish duty on PET behind export decline – Turkish duty PET Pakistani Polyethylene Terephthalate - Arhive

Turkey has been accused of inflicting a $ 4-5 billion financial loss on Pakistan since 2011 by imposing a “discriminatory” duty on Pakistani Polyethylene Terephthalate (PET). According to sources, Pakistan’s exports to Turkey have nosedived from above $ 1 billion to just 200 million dollars per annum due to “unjustified” safeguard duty on PET. If duty on PET is not removed then the purpose of the FTA becomes meaningless, officials maintain. Safeguard measure on PET was announced in the official gazette on September 8, 2011. Duty is eight percent and became applicable from November 8, 2011.

In June, talks between Pakistan and Turkey on Free Trade Agreement (FTA) were deadlocked; Ankara showed reluctance to reduce duties on textile products soon after signing the pact which is Pakistan’s main export item. Pakistani delegation headed by Secretary Commerce, Younas Dagha held parlays with Turkish government on June 5-6, 2017 and offered a deal to Turkey one step beyond Pakistan’s existing FTAs with other countries; however Turkey remained enmeshed in “ifs and buts”.

Turkey has already inked trade pacts with eight countries but is not ready to grant similar incentives to Pakistan. Commerce Ministry is urging the government to show a cold shoulder to Turkey after its “unreasonable” stance on FTA but Ministry of Foreign Affairs is unwilling to jeopardize the existing ties with the country, the sources added.

Turkey, sources said, maintains that implementation of tariff concessions will start after 10 years which is not acceptable to Pakistan.

“Turkish negotiating team wanted a generous offer from Pakistan but was not ready to reciprocate to meet Pakistan’s demand for inclusion of three or four textile products. The Turkish team relaxed its rigid stance after a meeting between the Turkish Minister for Trade and Secretary Commerce, Younas Dagha and agreed to reduce duty by 25 per cent on textile items in five years, with the remaining 75 per cent duty to be revisited after five years and agreed to reduce the duration of FTA- I to three years instead of five years,” the sources maintained.

Pakistani Commerce Secretary, sources said, refused to sign minutes of seventh round of talks on FTA arguing that when Turkey was unwilling to move an inch towards the proposed FTA, then what kind of minutes should he sign?

According to sources, Pakistan contended that Turkey should offer what it gives to other FTA partners whereas Pakistan is ready to go one step more than what it offers other countries – an offer that implies Pakistan may open its auto sector to Turkey, a concession that is not available to any other country.

Pakistan is insisting on removal of additional duties as at the time Pakistan had a very small share of these products in the Turkish markets – 4.54 percent for fabrics and 2.3 percent for garments. Major items of exports to Turkey include cotton fabric (woven), chemical material and product, chemical elements and compounds, cotton yarn, leather, rice (all sorts), articles of apparel and cloth knitted crochet and articles of apparel of textile material.

One tariff line (a variety of sesame seed) has been offered at 15 per cent MOP (MFN 10 per cent reduced to 8.5 per cent). The source said 19 high priority tariff lines were offered on reduced duty by Turkey in Round 5. In the revised offer two tariff lines, dates and flour meals of crustaceans have been offered at zero percent tariff, whereas nine tariff lines were offered for reduction to zero tariff in unequal phases in seven years. These include PET and other plastic items.

Turkey has offered these tariff lines to Pakistan’s competitors such as South Korea, Germany and Malaysia at zero percent. Pakistan requested a level playing field on these items upon entry into force of the FTA. Four tariff lines were offered for reduction to zero over seven years and they remain in the same category and have not been offered for immediate reduction.

Pakistan requested 25 tariff lines that were offered by Turkey at zero percent in order to ensure that these concessions are not withdrawn in a revised offer. Turkey has withdrawn concession on 126 tariff lines of cotton and textured yarn and has now added them to the exclusion list in the revised offer for 6th Round. The sources said Commerce Minister Engineer Khurram Dastgir Khan is expected to meet his Turkish counterpart soon in a European country wherein this issue will be discussed in detail for future line of action.

Earlier, former Prime Minister Nawaz Sharif and former Commerce Minister Engr Khurram Dastgir held negotiations with their counterparts on the proposed FTA. Pakistan’s former ambassador to Turkey, who is now High Commissioner in New Delhi, Sohail Ahmed wanted an early finalization of FTA. However, this did not materialize.